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International Public Goods and the Case for Foreign Aid


  • Jayaraman, Rajshri
  • Kanbur, Ravi


In the presence of international public goods, donors are faced with two instruments whereby recipient utility may be altered -contributions towards the international public good and direct transfers (conventional foreign aid). The self-interested donor's optimal choice of transfer-contributions combinations will typically depend upon the public goods technology. Some technologies call for a corner solution, with either transfers or contributions set to zero, and others are characterised by interior solutions, where the donor's optimal strategy calls for a positive transfers and positive contributions. Whether or not the presence of an international public good strengthens the case for conventional foreign liid transfers is therefore not always obvious.

Suggested Citation

  • Jayaraman, Rajshri & Kanbur, Ravi, 1999. "International Public Goods and the Case for Foreign Aid," Working Papers 127684, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127684

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    References listed on IDEAS

    1. Pedersen, Karl R, 1996. " Aid, Investment and Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(3), pages 423-438.
    2. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
    3. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
    4. Neil Bruce, 1989. "Defence Expenditures by Countries in Allied and Adversarial Relationships," Working Papers 745, Queen's University, Department of Economics.
    5. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    6. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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    Cited by:

    1. Rübbelke, Dirk T.G., 2011. "International support of climate change policies in developing countries: Strategic, moral and fairness aspects," Ecological Economics, Elsevier, vol. 70(8), pages 1470-1480, June.
    2. Alessandra Cepparulo & Luisa Giuriato, 2012. "Global Challenges and Country-Specific Responses through Aid Financing of Global Public Goods," Working Papers 156, University of Rome La Sapienza, Department of Public Economics.
    3. Vicary, Simon & Sandler, Todd, 2002. "Weakest-link public goods: Giving in-kind or transferring money," European Economic Review, Elsevier, vol. 46(8), pages 1501-1520, September.
    4. Sandler, Todd, 2001. "On financing global and international public goods," Policy Research Working Paper Series 2638, The World Bank.
    5. Hendrik P. van Dalen, 2007. "Global Aging and Economic Convergence: A Real Option or Still a Case of Science Fiction?," Tinbergen Institute Discussion Papers 07-051/1, Tinbergen Institute.
    6. Lei, Vivian & Tucker, Steven & Vesely, Filip, 2007. "Foreign aid and weakest-link international public goods: An experimental study," European Economic Review, Elsevier, vol. 51(3), pages 599-623, April.
    7. P. B. Anand, 2004. "Financing the Provision of Global Public Goods," The World Economy, Wiley Blackwell, vol. 27(2), pages 215-237, February.
    8. Cepparulo, Alessandra & Giuriato, Luisa, 2009. "Aid Financing of Global Public Goods: an Update," MPRA Paper 22625, University Library of Munich, Germany.
    9. Hielscher, Stefan & Pies, Ingo, 2005. "Internationale öffentliche Güter: Ein neues Paradigma der Entwicklungspolitik?," Discussion Papers 2005-5, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.

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